UNITED NATIONS -Secretary-General Kofi Annan is taking disciplinary action against the head of the U.N. oil-for-food program in Iraq following an investigation of alleged corruption in the humanitarian program, a senior U.N. official said yesterday.
The decision came after a report by former Federal Reserve Chairman Paul Volcker accused program chief Benon Sevan of unethical conduct and Joseph Stephanides of manipulating an oil-for-food contract, according to Mark Malloch Brown, Annan's chief of staff.
At the time the contract was awarded, Stephanides was chief of the U.N. Sanctions Branch and deputy director of the Security Council Affairs Division in the U.N. Department of Political Affairs. He now heads the division. Malloch Brown did not say what disciplinary steps would be taken but said they would be announced early next week.
Although Sevan said he never recommended any oil companies, the investigation led by Volcker concluded that he repeatedly solicited allocations of oil from Iraq under the program and created a grave and continuing conflict of interest.
Volcker also said there was convincing and uncontested evidence that the selection of the three U.N. contractors for the oil-for-food program -Banque Nationale de Paris, Saybolt Eastern Hemisphere BV and Lloyd's Register Inspection Limited -did not conform to established financial and competitive bidding rules.
Sevan denied any wrongdoing, but evidence from Iraqi officials contradicted those denials, according to the report. However, a summary of the report's findings did not accuse Sevan of any criminal actions.
Volcker's committee said it investigated allegations that Sevan, while executive director of the oil-for-food program, requested oil allocations from the Iraqi government on behalf of the African Middle East Petroleum Co. Ltd. Inc., a Swiss-based oil trading company known as AMEP.
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The Associated Press
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U.N. Secretary General Kofi Annan, left, walks with Benon Sevan, executive director of the United Nations Office of Iraq Program, following a meeting at U.N. headquarters April 3, 2003. Former U.S. Federal Reserve chairman Paul Volcker says his investigat
